Yesterday I went to a Pure Michigan tax seminar put on by the Michigan Chapter of the National Association of Tax Preparers. Aside from getting an update on the relatively unaltered 2011 Michigan tax return, I was also given the inside scoop on theÂ changes headed our way in 2012. Because the Michigan Treasury is leaving the general education of the changes up to tax practioners and pension companies, who will also be largely impacted by the changes, I thought I’d post a blog or two on the subject.
What are some of the changes headed our way in 2012? As you probably already know, Gov. Snyder changed the tax landscape in Michigan drastically by eliminating the Michigan Business Tax or MBT. This tax was hindering an already cripple economy by hurting existing business and dissuading new businesses from coming here.
In place of the MBT, revenue will come from increased tax on income. This increase will not come by way of a tax rate increase, but rather by less deductions and credits.
Michigan Taxpayers will no longer be able to deduct:
- PoliticalÂ Contributions
- $600 exemption for children under age 19
- IRA distributions used to pay higher education
- Charitable contributions made from a qualified retirement plan
- Proceeds won from MI bingo, raffle, or charity games
- Net Income from gas and oil royalty interest
- City Tax Credit
- Historical Preservation Credit
- Public Contribution Credit
- Community Foundation Credit
- Homeless/Food Bank Credit
- College Tuition Credit
- Vehicle Donation Credit
- Stillbirth Credit
- Adoption Credit